Ӱҵ

Eisai’s Materiality (Material Topics)

Formulation of a New Materiality

Ӱҵhas been disclosing materiality since the Integrated Report 2016 in order to clearly identify priority issues to be addressed to maximize corporate value over the medium to long term through the realization of our corporate concept. Our Materiality has undergone a series of improvements and received a certain degree of recognition from external stakeholders, but in accordance with the Articles of Incorporation, amended in June 2022, material topics have once again been identified in order to effectively achieve social good.

The horizontal axis has been changed from “Impact on Eisai’s Business” to “Eisai’s Intrinsic Corporate Value (social impact + financial value)”. We understand the importance of creating social impact and creating financial value by working toward the effective achievement of social good, and we have reflected this concept in the new material topics. In addition, the vertical axis has been renamed from “Long-term investors’ interests” to “Stakeholders’ interests”. This axis is intended to create long-term benefits for all stakeholders, including patients and their families, shareholders, and employees. Based on the concept that it is efficient to focus on long-term investors, who are beneficiaries of residual income, in order to sustainably maximize corporate value in a way that satisfies all stakeholders *1, we have adopted a method of identifying and prioritizing the interests of long-term investors. These objectives and methods remain unchanged. However, we have changed the name of the vertical axis so that it can be correctly understood that it is intended to create long-term benefits not only for long-term investors, but also for a wide range of stakeholders.

In accordance with the above two axes, we have identified 15 material topics. Among them, we have identified five topics of great interest to our stakeholders, including long-term investors, that have a positive social impact and correlation with PBR, which we believe will enhance our intrinsic Corporate value through our accelerated efforts, and have established long-term objectives, KPIs, and risks for FY2030. The new material topics and long-term goals, KPIs and risks were decided after consideration and approval by the Executive Board and confirmation by the Board of Directors. We will conduct reviews on the progress of these activities and aim to ensure their promotion through the PDCA cycle. In addition, we will conduct materiality analysis every year in light of changes in the business environment and social issues. Progress of initiatives in line with the action plan is also reviewed, and materiality and KPIs are updated as necessary.

  • *1
    Value Maximization, Stakeholder Theory, and the Corporate Objective Function (Michael C. Jensen, 2001)

Process of Identifying New Material Topics to Effectively Achieve Social Good

Materiality toward Effective Realization of Social Good through hhc Ecosystem

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1. Realization of Social Good in Dementia Area
Long-term objectives, KPIs, and risks

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Goal Aim to build a dementia ecosystem that supports and encompasses the People’s entire life from healthy to high-risk state, onset/treatment of disease, follow-up/prognosis, by playing the role of a producer
FY2030 targets and KPIs

Realization of a world where People can live with peace of mind when they are diagnosed with Alzheimer's disease

• Expansion of access to LEQEMBI to contribute to approx. 900,000 people a year globally. Generation of social impact of approx. 1.8 trillion yen in the US.
• Creation of next-generation dementia treatments following LEQEMBI, initiation late-stage clinical trials, and submission for multiple projects including the anti-MTBR tau antibody E2814
• Provision of new solutions that contribute to health and prevention that support the daily lives of people affected by the disease to 10 million people a year globally, in collaboration with other industries.
FY2025 targets and KPIs

Early establishment of LEQEMBI business and its value maximization

• Early approval and realization of reimbursement in all five regions 
• Contribution to approx. 100,000 people a year globally and generation of social impact of approx. 260 billion yen in the US.
• Approval for subcutaneous formulations and maintenance dosing regimens
• Collaboration with partners to quickly realize the use and dissemination of blood biomarkers as the definitive diagnosis tool for Alzheimer's disease
Major risks
• Risk that LEQEMBI's market penetration will not be achieved as expected due to limitation of healthcare system infrastructure and increased competition in the market
• Risk of not achieving expected profits due to discontinuation or delay in development of next-generation dementia treatments
• Risk of delays or inefficiencies in R&D, manufacturing, and commercialization activities due to disagreements with partners

2. Realization of Social Good in Oncology Area
Long-term objectives, KPIs, and risks

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Goal Cure of refractory cancers by creating innovative therapies, expansion of access, and realization of prevention based on a predictive model of cancer onset
FY2030 targets and KPIs

Contribution to refractory cancer patients through new subsequent Lenvima projects

• Earlier submission for MORAb-202
• Earlier submission for E7386 
• Earlier submission for BB-1701
• Early clinical introduction of new based on drug discovery with efficient approach, utilizing Deep Human Biology Learning, and submission for early approval
• Acquisition of products or co-development and co-commercialization with partner companies to enhance pipeline and maximize its value
FY2025 targets and KPIs

Value maximization of Lenvima

• Aiming to obtain new 8 indications for 6 cancer types in KEYTRUDA combination therapy
 (Non-small cell lung cancer 1L*1/2L*2, endometrial cancer 1L, head and neck cancer 1L/2L, hepatocellular carcinoma 1L TACE combination, esophageal cancer 1L, gastric cancer 1L)
• Contribute to approximately 160,000 people*3 a year globally and aim for annual product sales of 500 billion yen*4
Major risks
• Risk of not obtaining the expected profits due to discontinuation or delay of the development of new indications for Lenvima or the development plan of new projects
• Risk of delays or inefficiencies in R&D, manufacturing, and commercialization activities due to disagreements with partners

*1 First Line  *2 Second Line  *3 Approx. 90,000 people in FY2022  *4 Possibility of success not adjusted

3. Realizing Social Good in Global Health
Long-term objectives, KPIs, and risks

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Goal Elimination of diseases by creating treatments and expanding access, and contribution to reducing medical disparities
FY2030 targets and KPIs
• Lymphatic filariasis (LF)
- Provision of 3.9 billion diethylcarbamazine (DEC) tablets*1 and LF diagnostic kits
- Completed mass drug administration (MDA) in 30 countries*2, including in India, the world's largest epidemic country, where support for elimination activities was strengthened
- A total of approx. 31 million people will benefit from DEC tablets, resulting in social impact generation of approx. 12 trillion yen in lifetime, or 280 billion yen annually
• Mycetoma
- Facilitate cross-sectoral collaboration to establish a patient journey for mycetoma, where understanding of the disease is not yet well established
- Obtaining approval of E1224 in Sudan and establishing a sustainable delivery method
- Contribution by providing E1224 in endemic countries other than Sudan
• Malaria    Submission for new treatments and achievement of clinical Proof of Concept of a new drug candidate
FY2025 targets and KPIs
• LF
- Provision of DEC tablets in India. Expansion and strengthening support for elimination activities through holistic initiatives. Complete MDA in other 24 countries*2
- A total of approx. 29 million people will benefit from DEC tablets, resulting in social impact generation of approx. 260 billion yen annually
• Mycetoma   Submission in Sudan, Conducting epidemiological surveys to establish patient journey
• Malaria        Initiation of clinical trials of a new drug candidate
Major risks
•Risk of delays in control activities due to the deprioritization of LF countermeasures in endemic countries
•Risk of delays in control activities, drug development, review processes due to new infectious disease pandemics or conflicts
•Risk that duration of clinical trials will be longer than planned due to inadequacies in the clinical trial environment characteristic of neglected tropical diseases and malaria

*1 As of the end of March 2023, 2.13 billion tablets have been provided to 29 countries.〶*2 Based on the WHO LF elimination target by 2030

4. Maximization of Value of Human Resources
Long-term objectives, KPIs, and risks

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Goal Increase corporate value through solutions and innovation brought by maximizing the strengths and characteristics of diverse human resources
FY2030 targets and KPIs
Penetration of the corporate concept hhc
100% penetration rate of corporate concept (FY2022 results: 96%)
• Promotion and revitalization of hhc activities: more than 500 themes of hhc activities are reported every year

Increased employee engagement

• Percentage of highly engaged employees in the Global Engagement Survey: More than 90% (FY2022 results: 85%)

Enhancement of women’s participation to incorporate diversity

• Ratio of female managers in Japan*1  30% (FY2022 results: 11.9%)
Employee Impact  Human resource investment efficiency 87%
FY2025 targets and KPIs

Penetration of the corporate concept hhc

• Degree of penetration of corporate philosophy 100% (FY2022 results: 96%)
•Promotion and revitalization of hhc activities: hhc activity reports more than 500 themes each year

Increased employee engagement

•Percentage of highly engaged employees in the Global Engagement Survey: More than 90% (FY2022 results: 85%)

Enhancement of women’s participation to incorporate diversity

•Ratio of female managers in Japan*1  15% (FY2022 results: 11.9%)

Employee Impact  Human resource investment efficiency 82%

Major risks
• Risk of difficulty in succession for important global positions
• Risk of difficulty in securing and developing human resources that match company management directions

*1 Excluding Group companies in Japan

5. Financial Strategies
Long-term objectives, KPIs, and risks

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Goal Maximize mid- to long-term intrinsic corporate value (social impact + financial value)
FY2030 targets and KPIs

Maximize shareholder value while the company is in rapid growth

• Impact on Equity: 2 times level*1
• ROE: 25% level, DOE: 15% level

Increase financial robustness and secure growth investment capacity

• Equity attributable to owners of the parent: more than 1 trillion yen, ratio of equity attributable to owners of the parent: 70% level, Net DER: - 0.3~0.3
FY2025 targets and KPIs
• Expand intrinsic corporate value (social impact + financial value) through expansion of LEQEMBI and diethylcarbamazine (DEC)  tablets

   Impact on Equity: 0.65 times level*2

• Pursue an optimal capital structure while ensuring financial soundness

  Ratio of equity attributable to owners of the parent: 60% level, Net DER: - 0.3~0.3, Credit rating: Single A level

• Achieve both stable dividends and investment for growth

  In principle, pay dividends within the range of free cash flow on a multi-year level and aim to maintain a  dividend of 160 yen

Major risks
• Risk of not earning the expected revenue from LEQEMBI and Lenvima
• Risk of not earning the expected revenue due to discontinuation or delay of development plans for the subsequent products
• Risk of impairment of goodwill and intangible assets acquired through acquisitions and the introduction of products and development

*1 FY2030 objectives: social impact approx. 2 trillion yen (LEQEMBI approx. 1.7 trillion yen, DEC tablets approx. 280 billion yen) / equity attributable to owners of the parent over 1 trillion yen
*2 FY2025 objectives : social impact approx. 530 billion yen (LEQEMBI in the US approx. 270 billion yen, DEC tablets approx. 260 billion yen) / equity attributable to owners of the parent approx. 820 billion yen